Network coding (see e.g. Ahlswede, R.; Cai, N.; Li, S.-Y. R.; Yeung, R. W.-H. (2000). Network information flow. IEEE Transactions on Information Theory, 46 (2000), pp. 1204-1216) is a data distribution approach based on store, code and forward. The core notion is to allow and encourage mixing of data at intermediate network nodes. It helps to exploit the potential of the broadcasting nature of wireless radio in improving throughput of wireless communication systems.
Recently, wireless cooperative networks (see e.g. Fitzek, F. H. P.; Katz, M. D. (Eds.): Cooperation in wireless networks: Principles and applications. Berlin: Springer, 2006) comprising a transmission relay have attracted attention because of the potential improvement of the system capacity and throughput. Different technologies like traditional signal forwarding, PHY layer (PHY=physical) constellation adding and network coding have been deployed in such networks as is described e.g. by                Ahlswede, R.; Cal, N.; Li, S.-Y. R.; Yeung, R. W.-H. (2000). Network information flow. IEEE Transactions on Information Theory, 46 (2000), pp. 1204-1216,        Zhang, S.; Liew, S.; Lam, P.: Hot topic: Physical layer network coding. In Proceedings of the 12th Annual International Conference on Mobile Computing and Networking (MobiCom'06), 2006, pp. 358-365,        Katti, S.; Gollakota, S.; Katabi, D,: Embracing wireless interference: Analog network coding. Proceedings of the Special Interest Group on Data Communication Conference (SIGCOMM'07), Aug. 27-31, 2007, Kyoto, Japan, pp. 397-408,        Shengli Fu; Kejie Lu; Yi Qian; Varanasi, M.: Cooperative network coding for wireless ad-hoc networks. Proceedings of the IEEE GLOBECOM 2007, pp. 812-816,        
Spatial diversity is e.g. described by Tse, D.; Viswanath, P.: Fundamentals of wireless communications. New York: Cambridge University Press, 2005.
Although network coding in wireless networks may benefit from broadcasting, it also faces the challenge of channel fading. The MIMO (MIMO=multiple input multiple output) technology may improve the performance in fading environments by means of spatial diversity (see e.g. Fasolo, E.; Rossetto, F.; Zorzi, M.; Network Coding meets MIMO, Network Coding, Theory and Applications, 2008. NetCod 2008. Fourth Workshop on 3-4 Jan. 2008 pp. 1-6). The Alamouti scheme (see Alamouti, S. M.: A simple transmit diversity technique for wireless communication. IEEE Journal on Select Areas in Communications, vol. 16 (1998), pp. 1451-1458), for instance, may achieve full diversity with STBC (Space Time Block Coding). MIMO systems may also increase the data rate by using a spatial multiplexing scheme.
Some research on improving the performance of a two-step relay network exists. For example, the main idea of PHY layer network coding (see e.g. Zhang, S,; Liew, S.; Lam, P.: Hot topic: Physical layer network coding. In Proceedings of the 12th Annual International Conference on Mobile Computing and Networking (MobiCom'06), 2006, pp. 358-365) is network coding at the physical layer that deals with signal reception and modulation. It doubles the throughput of a canonical 2-way network, but involves strict conditions in symbol-phase synchronization and carrier-frequency synchronization. Katti, S.; Gollakota, S.; Katabi, D.: Embracing wireless interference: Analog network coding. Proceedings of the Special Interest Group on Data Communication Conference (SIGCOMM'07), Aug. 27-31, 2007, Kyoto, Japan, pp. 397-408 describe an improvement dealing with these synchronization constraints by estimating the wireless channels from two none aligned signals of two senders.